Exam 7: Fraud, Internal Control, and Cash

Electric Sunset Company gathered the following reconciling information in preparing its July bank reconciliation: Cash balance per books, 7/31 \ 22,000 Deposits in transit 1,200 Notes receivable and interest collected by bank 4,400 Bank charge for check printing 80 Outstanding checks 8,000 NSF check 680 The adjusted cash balance per books on July 31 is

Fitzgerald Company wrote checks totaling $34,160 during October and $37,300 during November. $32,480 of these checks cleared the bank in October, and $36,440 cleared the bank in November. What was the amount of outstanding checks on November 30?

If a check correctly written and paid by the bank for $427 is incorrectly recorded on the company's books for $472, the appropriate treatment on the bank reconciliation would be to

Having one person responsible for the related activities of ordering merchandise, receiving goods, and paying for them

Using _______________ documents is a control measure which helps in accounting for all documents in a series and also prevents a document from being recorded more than once.

Which one of the following items would not be considered cash?

The control principle related to not having the same person authorize and pay for goods is known as

Using pre-numbered checks and having an approved invoice for each check is an example of

A system of internal control

The daily cash count of cash register receipts made by department supervisors is an example of

Which one of the following would not cause a bank to debit a depositor's account?

Physical controls to safeguard assets do not include

Cash register overages are deposited in the petty cash fund and cash shortages are made-up from the petty cash fund.

Newton Company has recorded the following items in its financial records. The checking account is subject to a compensating balance of $5,000. The highly liquid investments had maturities of 3 months or less when they were purchased. The stock investment will be sold in the next 6 to 12 months. The plant expansion project will begin in 3 years. Instructions (a) What amount should Newton report as "Cash and cash equivalents" on its balance sheet? (b) Where should the items not included in part (a) be reported on the balance sheet?

A voucher system is used by many large companies as a means of controlling cash receipts.

Internal control is defined, in part, as a plan that safeguards

Notification by the bank that a deposited customer check was returned NSF requires that the company make the following adjusting entry:

An employee authorized to sign checks should not record

If a petty cash fund is established in the amount of $250, and contains $153 in cash and $94 in receipts for disbursements when it is replenished, the journal entry to record replenishment should include credits to the following accounts